Question
Vroom-Vroom manufactures miniature cars and has determined that its total manufacturing cost of $1,500,000 is a mixture of unit-level costs, product-level costs, and facility-level costs.
Vroom-Vroom manufactures miniature cars and has determined that its total manufacturing cost of $1,500,000 is a mixture of unit-level costs, product-level costs, and facility-level costs. Vroom-Vroom has assembled the following information concerning the manufacturing costs and the driver used to allocate the costs in each activity pool (units and product lines). Facility-level costs are not allocated to production.
Retail Products
| Total Manufacturing | Collector Products | |
Unit-level costs | $600,000 | 300,000 units | 500,000 units |
Product-level costs | 700,000 | 22 lines | 31 lines |
Facility costs | 200,000 | N/A | N/A |
| $1,500,000 |
|
|
How much cost would be allocated to the Retail division under an activity-based costing system that reflects an appropriate hierarchy?
(Please round to the nearest dollar at the end of your calculations)
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